-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nh9ODgs7zpX/D09XH0/+Yyiqbcd9TgGDbR6+4+UcLxPljT0lWQp5QBeC5cEP98yo GwZuwa3d2e2O49G/tGbhtQ== /in/edgar/work/0000071023-00-000030/0000071023-00-000030.txt : 20001115 0000071023-00-000030.hdr.sgml : 20001115 ACCESSION NUMBER: 0000071023-00-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NELSON THOMAS INC CENTRAL INDEX KEY: 0000071023 STANDARD INDUSTRIAL CLASSIFICATION: [2731 ] IRS NUMBER: 620679364 STATE OF INCORPORATION: TN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13788 FILM NUMBER: 767462 BUSINESS ADDRESS: STREET 1: 501 NELSON PLACE CITY: NASHVILLE STATE: TN ZIP: 37214-1000 BUSINESS PHONE: 6158899000 MAIL ADDRESS: STREET 1: P O BOX 141000 CITY: NASHVILLE STATE: TN ZIP: 37214-1000 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL PUBLISHERS INC DATE OF NAME CHANGE: 19721019 10-Q 1 0001.txt SECURITIES AND EXCHANGE C OMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-4095 THOMAS NELSON, INC. (Exact name of Registrant as specified in its charter) Tennessee 62-0679364 (State or other jurisdiction of (I.R.S. Employer Identification number) incorporation or organization) 501 Nelson Place, Nashville, Tennessee 37214-1000 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (615) 889-9000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No At November 9, 2000, the Registrant had outstanding 13,255,792 shares of Common Stock and 1,085,801 shares of Class B Common Stock. THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands)
September 30, March 31, September 30, 2000 2000 1999 ------------- ---------- ------------- (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 666 $ 814 $ 2,860 Accounts receivable, less allowances of $7,233, $7,171 and $6,914, respectively 86,526 79,052 82,414 Inventories 86,068 74,809 66,272 Prepaid expenses 16,425 13,652 12,527 Assets held for sale 19,632 22,168 - Deferred tax assets 9,679 9,679 6,715 ------------ ----------- ------------ Total current assets 218,996 200,174 170,788 Property, plant and equipment, net 17,797 17,423 24,709 Other assets 8,780 9,904 9,016 Deferred charges 659 959 1,592 Goodwill 70,964 69,770 58,321 ------------ ----------- ------------ TOTAL ASSETS $317,196 $298,230 $264,426 ============ =========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 39,949 $ 27,350 $ 19,097 Accrued expenses 14,450 16,142 15,233 Deferred revenue 6,363 6,553 - Dividends payable 574 569 569 Income taxes currently 2,378 3,851 2,509 Current portion of long-term debt and capital lease obligations 5,929 7,592 2,441 ------------ ----------- ------------ Total current liabilities 69,643 62,057 39,849 Long-term debt 108,249 100,359 90,066 Deferred tax liabilities 2,606 2,606 4,432 Other liabilities 1,324 1,476 1,502 Minority interest 119 - - Shareholders' equity: Preferred stock, $1.00 par value, authorized 1,000,000 shares; none issued - - - Common stock, $1.00 par value, authorized 20,000,000 shares; issued 13,255,792, 13,144,776 and 13,133,976 shares, respectively 13,256 13,145 13,134 Class B common stock, $1.00 par value, authorized 5,000,000 shares; issued 1,085,801, 1,085,819 and 1,096,619 shares, respectively 1,086 1,086 1,097 Additional paid-in capital 43,834 43,126 43,126 Retained earnings 77,079 74,375 71,220 ------------ ----------- ------------ Total shareholders' equity 135,255 131,732 128,577 ------------ ----------- ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $317,196 $298,230 $264,426 ============ =========== ============
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data)
Six Months Ended Three Months Ended September 30, September 30, 2000 1999 2000 1999 ----------- ----------- ---------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) NET REVENUES $146,551 $129,226 $81,121 $70,110 COST AND EXPENSES: Cost of goods sold 82,977 71,638 46,035 38,355 Selling, general and administrative 52,158 45,075 27,531 23,271 Amortization of goodwill and non-compete agreements 1,250 763 631 405 ----------- ---------- ---------- ---------- Total expenses 136,385 117,476 74,197 62,031 ----------- ---------- ---------- ---------- OPERATING INCOME 10,166 11,750 6,924 8,079 Other income (expense) (291) 249 (82) 227 Interest expense 3,731 3,144 1,912 1,624 ---------- ---------- ---------- ---------- Income before income taxes and minority interest 6,144 8,855 4,930 6,682 Provision for income taxes 2,177 3,223 1,799 2,430 Minority interest 119 - 119 - ----------- ---------- ---------- ---------- NET INCOME $ 3,848 $ 5,632 $ 3,012 $ 4,252 =========== ========== ========== ========== Weighted average number of shares outstanding: Basic 14,255 14,253 14,278 14,227 =========== ========== ========== ========== Diluted 14,289 14,258 14,324 14,230 =========== ========== ========== ========== NET INCOME PER SHARE: Basic $0.27 $0.40 $0.21 $0.30 =========== ========== ========== ========== Diluted $0.27 $0.40 $0.21 $0.30 =========== ========== ========== ========== DIVIDENDS DECLARED PER SHARE $0.08 $0.08 $0.04 $0.04 =========== ========== ========== ========== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Six Months Ended September 30, ------------------------------ 2000 1999 ------------ ------------- (Unaudited) (Unaudited) CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES: Net income $ 3,848 $ 5,632 Adjustments to reconcile net income to net cash provided by (used in) operations: Minority interest 119 - Depreciation and amortization 4,386 4,073 Loss on sale of fixed assets and assets held for sale 236 - Changes in assets and liabilities, net of acquisitions and disposals: Accounts receivable, net (7,474) (4,084) Inventories (11,259) 1,886 Prepaid expenses (2,773) 347 Accounts payable and accrued expenses 10,907 (5,966) Deferred revenues (190) - Income taxes currently payable and deferred (1,473) (284) ----------- ----------- Net cash provided by (used in) continuing operations (3,673) 1,604 ----------- ----------- Discontinued operations: Changes in discontinued assets - 33 ----------- ----------- Net cash provided by discontinued operations - 33 ----------- ----------- Net cash provided by (used in) operating activities (3,673) 1,637 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,368) (578) Proceeds from sale of business and discontinued assets 2,068 421 Purchase of net assets of acquired companies - net of cash received (760) (4,069) Changes in other assets and deferred charges (411) (653) ----------- ----------- Net cash used in investing activities (1,471) (4,879) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under line of credit 10,850 14,150 Payments under capital lease obligation - (11) Payments on long-term debt (4,623) (6,019) Dividends paid (1,139) (1,140) Proceeds from issuance of common stock 2 1 Common stock repurchased and retired - (1,649) Other financing activities (94) 161 ----------- ----------- Net cash provided by (used in) financing activities 4,996 5,493 ----------- ----------- Net increase (decrease) in cash and cash equivalents (148) 2,251 Cash and cash equivalents at beginning of period 814 609 ----------- ----------- Cash and cash equivalents at end of period $ 666 $2,860 =========== =========== Supplemental disclosures of non-cash investing and financing activities: Dividends accrued and unpaid $ 574 $ 569 Acquisition of minority interest of consolidated subsidiary by issuance of 108,574 common shares $ 760 -
THOMAS NELSON, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited consolidated condensed financial statements reflect all adjustments (which are of a normal recurring nature) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to Securities and Exchange Commission rules and regulations. The statements should be read in conjunction with the Summary of Significant Accounting Policies and notes to the consolidated financial statements included in the Company's annual report for the year ended March 31, 2000. The consolidated balance sheet and related information in these notes as of March 31, 2000, have been taken from the audited consolidated financial statements as of that date. Certain reclassifications have been made to conform presentation of the fiscal 2000 financial statements with fiscal 2001 presentation. Note B - New Pronouncements In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective, as amended, for fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 requires all derivatives to be recognized in the statement of financial position and to be measured at fair value. The Company anticipates adopting the provisions of SFAS No. 133 effective April 1, 2001 and does not expect that it will have a material impact on the Company's financial statements. In September 2000, the Emerging Issue Task Force of the FASB issued Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs" ("EITF 00-10"). EITF 00-10 addresses the income statement classification of shipping and handling fees both billed and incurred by entities. The Company will adopt EITF 00-10 on January 1, 2001, and does not expect the adoption to have a material impact on its consolidated financial statements. Note C - Inventories Components of inventories consisted of the following (in thousands):
September 30, March 31, September 30, 2000 2000 1999 ------------- ----------- ------------- Finished goods $77,745 $66,261 $58,761 Raw materials and work in process 8,323 8,548 7,511 ------------- ----------- ------------- $86,068 $74,809 $66,272
Note D - Cash Dividend On May 25, 2000 the Company's board of directors declared a cash dividend of $.04 per share of Common and Class B Common Stock. The dividend was paid August 21, 2000, to shareholders of record on August 7, 2000. On August 18, 2000, the Company's board of directors declared a cash dividend of $.04 per share of Common and Class B Common Stock. The dividend is payable November 20, 2000 to shareholders of record on November 6, 2000. Note E - Operating Segments The Company adopted SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information," at March 31, 1999, which changed the way the Company reports information about its operating segments. The Company is organized and managed based upon its products. The Company has two reportable business segments, identified as publishing and gift. The publishing segment primarily creates and markets Bibles, inspirational books, videos and hosts inspirational seminars for women. The gift segment primarily designs and markets gift products, including stationery items, albums, journals, candles, etc. Summarized financial information concerning the Company's reportable segments is shown in the following table. The "Other" column includes corporate related items not allocated to reportable segments (in thousands).
For the Three Months Ended Publishing Gift Other Total - -------------------------- ---------- ---------- ---------- ---------- September 30, 2000: Revenues $ 53,810 $27,311 $ - $ 81,121 Operating income 6,334 590 - 6,924 September 30, 1999: Revenue $ 41,141 28,969 - 70,110 Operating income 4,073 4,006 - 8,079 For the Six Months Ended Publishing Gift Other Total - ------------------------ ---------- ----------- ---------- --------- September 30, 2000: Revenues $100,715 $45,836 $ - $146,551 Operating income 10,169 (3) - 10,166 September 30, 1999: Revenues $ 80,533 $48,693 $ - $129,226 Operating income 7,412 4,338 - 11,750 As of September 30, 2000: Identifiable assets $137,428 $84,023 $95,745 $317,196 As of September 30, 1999: Identifiable assets $126,675 $72,715 $65,036 $264,426
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW The following table sets forth for the periods indicated certain selected statements of operations data of the Company expressed as a percentage of net revenues and the percentage change in dollars in such data from the prior fiscal year.
Six Months Ended Fiscal Year-to-Year September 30, Increase 2000 1999 (Decrease) ------- ------- --------------- (%) (%) (%) Net revenues Publishing 68.7 62.3 25.1 Gift 31.3 37.7 (5.9) ----- ----- ------ Total net revenues 100.0 100.0 13.4 ----- ----- ------ Expenses Cost of goods sold 56.6 55.4 15.8 Selling, general and administrative 35.6 34.9 15.7 Amortization of goodwill and non-compete agreements 0.9 0.6 63.9 ----- ----- ------ Total expenses 93.1 90.9 16.1 ----- ----- ------ Operating income 6.9 9.1 (13.5) ===== ===== ====== Net income 2.6 4.4 (31.7) ===== ===== ======
The Company's net revenues fluctuate seasonally, with net revenues in the first fiscal quarter historically being lower than those for the remainder of the year. This seasonality is the result of increased consumer purchases of the Company's products during the traditional holiday periods. Due to this seasonality, the Company has historically incurred a loss or recognized only a small profit during the first quarter of each fiscal year. In addition, the Company's quarterly operating results may fluctuate significantly due to the seasonality of new product introductions, the timing of selling and marketing expenses, changes in sales and product mixes. The following discussion includes certain forward-looking statements. Actual results could differ materially from those reflected by the forward-looking statements and a number of factors may affect future results, liquidity and capital resources. These factors include softness in the general retail environment, the timing of products being introduced into the market, the level of returns experienced by operating divisions, the level of margins achievable in the marketplace and the ability to minimize operating expenses. Future revenue and margin trends cannot be reliably predicted and may cause the Company to adjust its business strategy during the remainder of fiscal 2001. The Company disclaims any intent or obligation to update forward-looking statements. Results of Operations - --------------------- Net revenues for the first six months of fiscal 2001 increased $17.3 million, or 13.4%, and for the second quarter increased $11.0 million, or 15.7%, over the same periods in fiscal 2000. The publishing product net revenues for the first six months increased $20.2 million, or 25.1%, and for the second quarter increased $12.7 million, or 30.8%, compared to the prior year. The increases for both periods of fiscal 2001 were related almost entirely to revenues from operations acquired during the past twelve months. Net revenues for the first six months of fiscal 2000 were positively impacted by a book from a major author being released in the first quarter of fiscal 2000 with no comparable release in the current year period. Net revenues from gift products for the first six months decreased $2.9 million, or 5.9%, and for the second quarter decreased $1.7, or 5.7%, compared to the prior year. The decreases for both periods of fiscal 2001 were primarily due to a soft retail market for both publishing and gift segments. The year-to-date net revenues from gift products were also adversely impacted by product availability and distribution issues in the month of April. Price increases did not have a material effect on net revenues. The Company's cost of goods sold increased for the first six months of fiscal 2001 by $11.3 million, or 15.8%, and for the second quarter by $7.7 million, or 20.0%, over the same periods in fiscal 2000 and, as a percentage of net revenues, increased to 56.6% for the first six months of fiscal 2001 from 55.4% and for the second quarter to 56.7% from 54.7% in the comparable periods in fiscal 2000. The increase in cost of goods sold, as a percentage of net revenues, for both periods in fiscal 2001 resulted primarily from the impact of different cost structures of operations acquired over the past twelve months, which had a higher cost of goods sold as a percentage to revenue. Selling, general and administrative expenses for the first six months of fiscal 2001 increased by $7.1 million, or 15.7%, and for the second quarter increased $4.3 million, or 18.3%, from the same periods in fiscal 2000. These expenses, expressed as a percentage of net revenues, increased to 35.6% for the first six months of fiscal 2001 versus 34.9% and for the second quarter to 33.9% from 33.2% in the same periods in fiscal 2000. These increases as a percentage of net revenues for both periods were attributable to lower than anticipated sales volume in the gift product segment. The increase in interest expense for the first six months and the second quarter of fiscal 2001 compared to the prior periods in fiscal 2000 resulted from increased borrowing levels to fund acquisitions made over the past twelve months. Liquidity and Capital Resources - ------------------------------- At September 30, 2000, the Company had $0.7 million in cash and cash equivalents. The primary sources of liquidity to meet the Company's future obligations and working capital needs are cash generated from operations and borrowings available under bank credit facilities. At September 30, 2000, the Company had working capital of $149.4 million. Net cash provided by (used in) operating activities was ($3.7) million and $1.6 million for the first six months of fiscal 2001 and 2000, respectively. Cash used in operations during the first six months of fiscal 2001 was principally attributable to an increase in accounts receivable due to an increase in revenues and timing of programs with mass merchandisers. Cash provided by operations during the first six months of fiscal 2000 was principally attributable to a decrease in inventories. During the first six months of fiscal 2001, capital expenditures totaled approximately $2.4 million primarily consisting of computer and warehousing equipment. During the remainder of fiscal 2001, the Company anticipates capital expenditures of approximately $1.6 million primarily consisting of computer and warehousing equipment. The Company's bank credit facilities are unsecured and consist of a $100 million credit facility and a $10 million credit facility (collectively, the "Credit Agreements"). The $100 million credit facility bears interest at either the prime rate or, at the Company's option, LIBOR plus a percentage, subject to adjustment based on certain financial ratios, and matures on December 13, 2005. The $10 million credit facility bears interest at LIBOR plus a percentage, subject to adjustment based on certain financial ratios, and matures on July 31, 2001. At September 30, 2000, the Company had $94.6 million outstanding under the Credit Agreements, and $15.4 million available for borrowing. Due to the seasonality of the Company's business, borrowings under the Credit Agreements typically peak during the third quarter of the fiscal year. At September 30, 2000, the Company had outstanding approximately $15.6 million of unsecured senior notes ("Senior Notes"). The Senior Notes bear interest at rates from 6.68% to 8.31% due through fiscal 2006. Under the terms of the Credit Agreements and the Senior Notes, the Company has agreed to limit the payment of dividends and to maintain certain interest coverage and debt-to-total-capital ratios which are similarly calculated for each debt agreement. At September 30, 2000, the Company was in compliance with all covenants of these debt agreements, as amended. Management believes cash generated by operations and borrowings available under the Credit Agreements will be sufficient to fund anticipated working capital requirements for existing operations through the remainder of fiscal 2001. Quantitative and Qualitative Disclosures about Market Risk - ---------------------------------------------------------- There have been no material changes in the Company's investment strategies, types of financial instruments held or the risks associated with such instruments which would materially alter the market risk disclosures made in the Company's Annual Report on Form 10-K for the year ended March 31, 2000. PART II Item 2. Changes in Securities and Use of Proceeds On August 23, 2000, as consideration for the acquisition of minority interest shares (representing 3%) of a consolidated subsidiary, New Life Treatment Centers, Inc., the Company issued 108,574 shares of common stock to the minority shareholder. The issuance of these shares of common stock was exempt under Section 4(2) of the Securities Act of 1933. Item 4. Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Stockholders on August 17, 2000 (the "Annual Meeting"). At the Annual Meeting, the stockholders of the Company voted to elect three Class Two directors, S. Joseph Moore; Robert J. Niebel, Sr.; and Millard V. Oakley, for three-year terms and until their successors are duly elected and qualified. The following table sets for the the number of votes cast for and withheld/abstained with respect to each of the nominees:
Nominee For Withheld/Abstained Against - ---------------------- ------------- ------------------ ----------- S. Joseph Moore 18,756,510 180,552 34,890 Robert J. Niebel, Sr. 18,775,273 162,789 33,890 Millard V. Oakley 18,758,373 179,589 33,990
Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits required by Item 601 of Regulation S-K Exhibit 11 - Statement re Computation of Per Share Earnings Exhibit 27 - Financial Data Schedule (b) The Company filed a Form 8-K on October 27, 2000 to disclose information concerning the Company's revision of its second quarter of fiscal 2001 earnings expectations. The Company filed a Form 8-K on November 1, 2000 to announce its second quarter of fiscal year 2001 financial results. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Thomas Nelson, Inc. (Registrant) November 14, 2000 BY s/Joe L. Powers - -------------------- ------------------------- Joe L. Powers Executive Vice President (Principal Financial and Accounting Officer) INDEX TO EXHIBITS Exhibit Number - ------- 11 -- Statement re Computation of Per Share Earnings 27 -- Financial Data Schedule (for SEC purposes only) EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from the Company's 10-Q for the period ended September 30, 2000, and is qualified in its entirety by reference to such financial statements and the notes thereto. 1,000 6-MOS MAR-31-2001 APR-01-2000 SEP-30-2000 666 0 93,759 7,233 86,068 218,996 43,043 25,246 317,196 69,643 108,249 0 0 14,342 120,913 317,196 144,436 146,551 82,977 135,135 1,250 728 3,731 6,144 2,177 3,848 0 0 0 3,848 0.27 0.27
EX-11 3 0003.txt EXHIBIT 11 STATEMENT RE-COMPUTATION OF PER SHARE EARNINGS (Dollars in thousands, except per share data)
Six Months Ended Three Months Ended September 30, September 30, 2000 1999 2000 1999 ___________ __________ ___________ ___________ (Unaudited) (Unaudited) (Unaudited) (Unaudited) BASIC EARNINGS PER SHARE: Weighted average shares outstanding 14,255 14,253 14,278 14,227 ========= ========= ========= ========= Net income $ 3,848 $ 5,632 $ 3,012 $ 4,252 ========= ========= ========= ========= Net income per share $ 0.27 $ 0.40 $ 0.21 $ 0.30 ========= ========= ========= ========= DILUTED EARNINGS PER SHARE: Weighted average shares outstanding 14,255 14,253 14,278 14,227 Dilutive effect of common stock options 34 5 46 3 --------- --------- --------- --------- Total shares 14,289 14,258 14,324 14,230 ========= ========= ========= ========= Net income $ 3,848 $ 5,632 $ 3,012 $ 4,252 ========= ========= ========= ========= Net income per share $ 0.27 $ 0.40 $ 0.21 $ 0.30 ========= ========= ========= =========
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